Can a Home Seller Access the Deposit Funds Early?

Can a Home Seller Access the Deposit Funds Early?

Can a Home Seller Access the Deposit Funds Early?

8 April 2020
Law, Blog

When two individuals agree to the terms related to a house purchase, certain items of paperwork will be signed, and the process of transfer may begin. This will typically be handled by a conveyancer on each side and will require a certain amount of time to complete while checks are made to ensure everything is above board. Usually, a deposit will be held in trust by the conveyancer as a sign of good intent on behalf of the buyer, which should give the seller some confidence. Typically, this deposit will only be handed over to the seller on the day of closing, but this is not always the case. Is it possible for the seller to get their hands on this money ahead of time and if so, what are the requirements?

Reasons for the Request

Sometimes, a seller may need additional funds once the initial contract has been signed and in advance of closing. In this case, they may be able to complete what is known as a section 27 request, which will be sent to the buyer's agent for due consideration. Within this, they will request that the deposit is released to them early and give their reasons for doing so. They'll need to provide full details and some assurances to the buyer if they want it to be actively considered.

Getting Approval

The buyer is not required to agree to the request and will always want to ensure that certain conditions are met. Crucially, they will want to ensure that the money is not going to be used to settle any outstanding mortgage on the property and the seller will need to prove that this is the case as part of their application. On occasion, a seller may not have enough equity in the property as it is stands and may need access to the deposit in order to settle this. Typically, the seller should include a letter from the bank that covers this issue to give the buyer some peace of mind.

Reasons for Refusal

Don't expect the buyer to comply if there are any outstanding issues related to the title at the time they receive such a request. They need to believe that it is safe for them to agree to the request, and you need to ensure that your section 27 statement is properly crafted in the first place.

How to Handle This

Get in touch with your conveyancer if you want to request access to the deposit ahead of time. They will help you to gather the necessary information, complete the section 27 statement and negotiate with their counterpart for you.

To learn more about conveyancing services, contact conveyancers in your area.

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